United Arab Emirates fund in talks to invest in OpenAI

MGX, which the U.A.E. created earlier this year to invest in artificial intelligence projects, hasn’t determined the size of a potential investment in OpenAI, according to people with knowledge of the discussions.

If the investment is completed, it would bring the Middle Eastern nation closer to one of the world’s leading AI companies and one of the most valuable private startups in the U.S.

OpenAI is in talks to raise as much as $6.5 billion in a funding round that would value it at $150 billion, according to people familiar with the matter. The investment terms are still being completed, the people said. If the startup ends up valued at $150 billion, that would nearly double its $86 billion valuation last year—a sign of continued investor enthusiasm for the potential of generative AI and OpenAI’s leading role in the space.

Venture-capital firm Thrive Capital has committed $1 billion and will lead the round, while Microsoft, Apple and Nvidia are in talks to also invest, The Wall Street Journal previously reported. Bloomberg previously reported on OpenAI’s potential new valuation.

Separately, OpenAI chief executive Sam Altman has told investors his company is considering changing its corporate structure to be more attractive to them. OpenAI is currently a nonprofit that has a for-profit subsidiary through which investors can receive a capped share of its profits—an unusual setup. Any additional profits would go to the nonprofit.

Altman has said he intends to remove the profit cap for investors, some of the knowledgeable people said. The company will remain a nonprofit, according to a spokeswoman.

OpenAI isn’t currently profitable, but it is growing quickly. Altman has told investors that the startup’s annualized recurring revenues—a projection of annual revenue based on recent receipts—recently hit about $4 billion.

Budding relationship

Oil rich Middle East nations are increasingly eager to plow their wealth into the booming AI space.

For his part, Altman has been courting the U.A.E.’s leaders to help fund the massive costs associated with building AI technology. Separately from the fundraising discussions, he has talked with Sheikh Tahnoun bin Zayed al Nahyan about an initiative to boost the world’s chip-building capacity that could cost trillions of dollars, The Wall Street Journal previously reported. Sheikh Tahnoun chairs MGX’s board and oversees a rapidly growing financial portfolio for the U.A.E.

The U.A.E. created MGX in March to invest in artificial-intelligence companies and the infrastructure required for making the technology more widely available. The nation’s sovereign-wealth fund Mubadala and state-backed AI company G42 are founding partners in MGX.

A fund affiliated with Mubadala previously invested in one of OpenAI’s competitors, Anthropic, by acquiring a nearly $500 million stake owned by bankrupt cryptocurrency exchange FTX.

G42, which received a $1.5 billion investment from Microsoft this year, has worked with OpenAI on developing AI services for the United Arab Emirates and the broader region.

MGX’s board recently “approved several strategic initiatives, focusing on investments in digital infrastructure, advanced technology, and artificial intelligence," Abu Dhabi said in a press release this month.

Write to Miles Kruppa at miles.kruppa@wsj.com, Berber Jin at berber.jin@wsj.com and Tom Dotan at tom.dotan@wsj.com